WILLEMSTAD–The emergency regulation imposed on insurance company ENNIA since July 2018 will not be removed, the Court of First Instance in Curaçao decided Thursday in the injunction filed by ENNIA’s shareholder Parman International BV, owned by Hushang Ansary, against the Central Bank of Curaçao and St. Maarten (CBCS).
According to the judge, Parman’s claims were “insufficiently plausible.” In addition to the withdrawal of the emergency regulation, the shareholder also demanded the suspension of the measures and decisions taken under the emergency regulation.
Parman also demanded that CBCS consult with the shareholder to arrive at a restructuring of the ENNIA Group that is acceptable to all parties.
According to Parman, there was no reason to declare the emergency regulation. It is true that the insurer does not meet the solvency requirements, but that is purely an accounting issue that could be solved in a simple manner and certainly did not justify a drastic measure such as the emergency regulation, Parman argued.
In addition, Parman stated that the entities ENNIA Caribe Holding (ECH) and EC Investment BV (ECI), which are not under the Central Bank’s supervision, should not be covered by the emergency regulation.
The Court sees this differently. The insurer did not follow the rules of intercompany receivables that were tightened in 2015, the Court said.
“Insurers have to adhere to these rules, and if they do not do so, the regulator may intervene,” according to the Judge.
The Central Bank intervened at ENNIA because there are problems with financial solvency in the longer term.
Furthermore, the Judge stated that if the issue could simply be resolved by means of a restructuring, it is not easy to understand why that solution has not been realised long ago.
Parman’s claim that CBCS had unjustifiably used the most serious means to remedy the situation within ENNIA was also incorrect, according to the Judge. The Central Bank had already used other means before submitting a request for the declaration of an emergency regulation with the Court.
Silent curators were appointed at ENNIA Caribe Leven (ECL) life insurances in September 2016, but this did not lead to the desired improvement. An improvement plan was blocked by the shareholder and instead a substantial amount of money was withdrawn from the group.
All in all, CBCS was in its right to come to the conclusion that the emergency regulation was necessary, and in that context there is no question of violation of trust or of the principle of proportionality, the Court stated.
A court case on the merits concerning the withdrawal of the emergency regulation is still pending, According to the judge in the injunction, it is plausible that the judge in the main case would arrive at the conclusion that the emergency regulation is justified.
The lawsuit was filed because, according to Parman, the assets of the ENNIA companies, and, therefore, the value of their shares, are reduced as a result of the emergency regulation. As long as the emergency regulation continues, their value would be reduced even more, Parman claims.
In the meantime, the United States (US) court has made a decision pertaining to the legal recognition in the United States of the existing emergency regulation for insurance company ENNIA.
The US court acknowledged the emergency regulation on December 20, 2018. The US court heard Parman’s objections during a court hearing on January 22. The objections raised by Parman failed to convince the judge, and on Tuesday the judge decided that ENNIA is to receive the funds and investments in the accounts at Merrill Lynch.
With this decision the US court gave ENNIA control over the Merrill Lynch accounts. CBCS said that with this decision another milestone has been achieved for the restructuring of ENNIA.
CBCS said it would continue to do everything in its power to restore ENNIA’s solvency, with the aim of the company’s obligations towards policyholders in the long term.
Source: The Daily Herald https://www.thedailyherald.sx/islands/84892-emergency-regulation-for-ennia-remains-in-place
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